Disability Benefits Coverage
Liabilities and Penalties for Not Having Required Disability Benefits Insurance Coverage
Failure of an employer to provide disability benefits coverage as required by law will subject the employer to penalties and the cost of any claims associated with the noncompliance. The Board has the authority under the DBL to determine when coverage is required. Sole proprietors, partners of a partnership, and the President, Secretary and Treasurer of a corporation may be held personally liable for an employer's failure to secure disability benefits insurance. Liabilities and penalties for not having the required disability benefits coverage include, but are not limited to:
Penalties for Noncompliance with Disability Benefits Mandatory Coverage Requirements
- Section 220 (2) of the Disability Benefits Law — The Board shall impose upon an employer a penalty of 1/2 of one percent of the employer's payroll during the period of noncompliance PLUS an additional sum of $500 for each period of noncompliance.
- Section 220 (1) of the Disability Benefits Law — Not securing required disability benefits insurance is a misdemeanor, punishable by a fine of not less than $100 nor more than $500 or imprisonment for up to one year or both. A second violation of the Law within five years may result in a fine of not less than $250 nor more than $1,250. A third or subsequent violation of the Law within five years may result in a fine of up to $2,500.
Liability for Claims Against an Uninsured Employer Under the Disability Benefits Law, Section 213 (1)
- In addition to the penalties assessed under Section 220, subdivision 2, the employer is liable for either the total value of any disability benefits claims paid by the Special Fund for Disability Benefits during the period of noncompliance OR one percent of the employer's payroll during the period of noncompliance, whichever is greater.